2025 (1) TMI 59 - HC - Indian Laws

Suit for Recovery - Direction to deposit 75% of the decretal amount during the pendency of the present Appeals - separate pre-institution mediation was not initiated for the Counter-Claim - HELD THAT - The Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 hereinafter referred to as Pre-Institution Mediation Rules provides that a party to a commercial dispute is required to initiate mediation prior to the filing of a suit. Sub-rule (8) of Rule 3 of Pre-Institution Mediation Rules provides that the mediation process should be completed within a period of three months - A commercial dispute is defined as a dispute referred to in Section 2 (1) (c) of Commercial Courts Act, 2015. Section 2 (1) (xviii) of the CC Act includes agreements for sale of goods or provision of services . Concededly, the dispute between the parties is commercial in nature and is subject to the Pre-Institution Mediation Rules. The Supreme Court in the judgment of Yamini Manohar vs. T.K.D Keerthi 2023 (10) TMI 1375 - SC ORDER , relying on the M/s. Patil Automation case, has held that pre-litigation mediation is mandatory unless the suit contemplates urgent relief. It was further held that a plaintiff should not be permitted to file an application for interim relief as a subterfuge to wriggle out of the requirement of mandatory pre-institution mediation. The Court held that in order that the provision is not bypassed, the learned Commercial Court has a role, although a limited one, to examine whether the suit contemplates an urgent relief so as to keep a check that legislative intent behind the enactment of Section 12A of the CC Act is not defeated. In the present case, pre-litigation mediation was initiated by Molmek prior to instituting the suit. Molmek has relied upon the copy of the Non-Starter Report of the authority appointed for pre-institution mediation, South-West, DLSA, Dwarka Courts, New Delhi, dated 15.03.2022 to submit NAPL did not attend the Mediation proceedings as these were closed as a non-starter . NAPL filed its combined Written Statement and Counter-Claim on 31.08.2022 raising a Counter-Claim of Rs. 7,62,930/- against Molmek before the learned Commercial Court. The object of the CC Act is to ensure speedy resolution of commercial disputes to accelerate economic growth and improve the international image of the Indian Justice System and to restore the faith of the investors. Once a party has taken steps to exhaust the remedy of pre-institution mediation to then ask the opposite party in a case where the subject matter of dispute is entirely the same, to once again undertake pre-institution mediation, prior to filing its counter-claim would defeat the very purpose of the CC Act and delay adjudication of the commercial dispute between the parties. The Supreme Court in AMBALAL SARABHAI ENTERPRISES LTD. VERSUS K.S. INFRASPACE LLP ANR. 2019 (10) TMI 1601 - SUPREME COURT case has held that the statement of object and reasons for the enactment of the CC Act was the early and speed resolution of the commercial disputes and thus, there was an amendment made and fast track procedure set in place by the CC Act - The Supreme Court analysed the provisions of the CC Act and based on such analysis held that statutory provisions of the CC Act and the language therein should be interpreted purposefully to facilitate the swift resolution of commercial disputes, thereby benefiting litigants involved in trade and commerce and contributing to the country's economic growth. NAPL has placed evidence before the learned Trial Court which remains uncontroverted with respect to the supplies of goods by it to Molmek to show a total number of 46 deliveries between the period 26.10.2018 and 08.01.2021. NAPL has given invoice numbers, e-way bill numbers and all filed requisite evidence. The 5 disputed invoices also form part of its GST returns that were filed. The learned Trial Court has conducted a detailed examination and found that NAPL has proved its delivery. Conclusion - Molmek failed to prove its claim for recovery due to insufficient evidence. The separate pre-institution mediation for the counter-claim was not necessary, as it would undermine the objective of the Commercial Courts Act. Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The judgment addresses the following core legal questions:

• Whether the plaintiff (Molmek) is entitled to a decree for the recovery of Rs. 74,91,565.70/-, along with interest and costs.
• Whether the defendant (NAPL) is entitled to a decree for the sum of Rs. 7,62,930/-, as claimed in the counter-claim, along with interest.
• Whether the counter-claim by NAPL required pre-institution mediation under the Commercial Courts Act, 2015.
• Whether the evidence presented by NAPL, including invoices, e-way bills, and GST returns, sufficiently proves the delivery of goods to Molmek.
• Whether the WhatsApp chats and other documentary evidence support NAPL's claims.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement of Molmek to Recovery

• Legal Framework and Precedents: The case examines the entitlement of Molmek to recover the claimed amount based on invoices and financial transactions between the parties.
• Court's Interpretation and Reasoning: The court found that Molmek failed to substantiate its claim for recovery as it did not provide sufficient evidence to prove the delivery of goods or the outstanding amount.
• Key Evidence and Findings: Molmek did not produce any witnesses or original books of accounts to support its claim.
• Application of Law to Facts: The court applied the principles of evidence and found that Molmek did not meet the burden of proof required to substantiate its claim.
• Treatment of Competing Arguments: The court considered Molmek's arguments but found them unpersuasive due to the lack of supporting evidence.
• Conclusions: The court dismissed Molmek's claim for recovery.

Issue 2: Entitlement of NAPL to Counter-Claim

• Legal Framework and Precedents: The court examined NAPL's entitlement to the counter-claim based on the evidence presented, including invoices, e-way bills, and GST returns.
• Court's Interpretation and Reasoning: The court found that NAPL successfully proved the delivery of goods and the outstanding amount through documentary evidence and witness testimonies.
• Key Evidence and Findings: NAPL provided detailed invoices, e-way bills, and GST returns, which were corroborated by witness testimonies, including a CGST official and a driver.
• Application of Law to Facts: The court applied the relevant provisions of the CGST Rules and the Indian Evidence Act to conclude that NAPL's evidence was credible and sufficient.
• Treatment of Competing Arguments: Molmek's arguments regarding the authenticity of the invoices and the absence of delivery receipts were considered but found unconvincing.
• Conclusions: The court upheld NAPL's counter-claim and awarded the claimed amount with interest.

Issue 3: Requirement of Pre-Institution Mediation for Counter-Claim

• Legal Framework and Precedents: The court examined the applicability of Section 12A of the Commercial Courts Act, 2015, which mandates pre-institution mediation for commercial disputes.
• Court's Interpretation and Reasoning: The court concluded that separate pre-institution mediation for the counter-claim was not required, as the primary suit had already undergone this process.
• Key Evidence and Findings: The court noted that Molmek had initially conceded that pre-institution mediation was not necessary for the counter-claim.
• Application of Law to Facts: The court reasoned that requiring separate mediation for the counter-claim would defeat the purpose of the Commercial Courts Act, which aims for speedy resolution of disputes.
• Treatment of Competing Arguments: The court considered Molmek's reliance on the M/s. Patil Automation case but distinguished the facts and circumstances.
• Conclusions: The court dismissed the objection regarding the lack of pre-institution mediation for the counter-claim.

3. SIGNIFICANT HOLDINGS

• The court held that Molmek failed to prove its claim for recovery due to insufficient evidence.
• NAPL successfully proved its counter-claim through credible evidence, including invoices, e-way bills, and GST returns.
• The court found that separate pre-institution mediation for the counter-claim was not necessary, as it would undermine the objective of the Commercial Courts Act.
• Verbatim Quote: "The object and purpose of the Commercial Courts Act is to ensure that the Commercial Courts, Commercial Appellate Courts, Commercial Division and Commercial Appellate Division of the High Courts and also to ensure that the commercial cases are disposed of expeditiously, fairly and at reasonable cost to the litigant."
• The court dismissed Molmek's appeals and upheld the Commercial Court's judgment in favor of NAPL.